How a Civil War law forced a local medical group to pay $5.3M

In 1863, at the height of the Civil War, Congress passed legislation to ensure suppliers to the Union Army were not cheating the government.

More than 150 years later, that legislation — the False Claims Act — and its amended derivatives enabled a local worker to challenge the billing practices of her former employer, Hudson Valley Hematology Oncology Associates, resulting in a $5.3 million settlement announced Friday by Preet Bharara, U.S. Attorney for New York’s Southern District.

The medical practice, which treats cancer and blood disorders and has offices in Poughkeepsie and Fishkill, admitted it illegally waived Medicare co-pays for patients and then added those amounts to its bills to the taxpayer-funded health insurance program.

It also admitted it entered billing codes indicating doctors had overseen or administered a procedure, when only a nurse had done so, thereby inflating the bills to Medicare and Medicaid.

How those revelations came to light is representative of the growing success of False Claims Act whistleblower lawsuits in health care cases.

Last December, the Department of Justice announced it had obtained more than $3.6 billion in settlements in fiscal year 2015. It marked the fourth year in a row the department had exceeded that total. Health care cases accounted for the largest share of those recoveries, $1.9 billion.

In the case of Hudson Valley Hematology Oncology Associates, the actions were initiated by Lucille Abrahamsen, a Highland resident who served as an accounts receivable representative and filed a lawsuit under the False Claims Act.

Abrahamsen did not return a phone message seeking comment. But her attorney, Reuben Guttman of Washington, D.C.-based firm of Guttman, Buschner & Brooks PLLC, said she contacted the law firm after she became aware of the improper billing practices.

“In this day and age, people who see wrongdoing in the workplace … know enough to see that there are red flags,” Guttman said.

Guttman said his office receives hundreds of calls a year but brings only a handful of cases. Sometimes there is not enough evidence to make a claim. Sometimes there is no wrongdoing. Sometimes there is a violation, but an action can only be brought directly by the government.

After conducting its own investigation, the law firm filed the lawsuit on Abrahamsen’s behalf on April 14, 2014.

“Once we file the complaint, the government processes the complaint and sends it to the appropriate agencies involved,” he said.

That led to a meeting at Bharara’s office, an investigation by the federal health and human services department and finally, Friday’s settlement.

“This is a terrific result,” Guttman said, “and it is an example of how efforts to combat Medicare and Medicaid fraud are now being carried out the provider level.”